Canadian tax burden estimates have been leaving out a major tax on business investment, says a new report from the C.D. Howe Institute. As such, the think tank is calling on governments to include the missed business property tax in METR estimates.

The report, called “Business Tax Burdens in Canada’s Major Cities: The 2017 Report Card,” quantifies the 2017 tax burden on business investment for the largest city in each province. It examines corporate income, retail sales, land transfer and business property taxes at the federal, provincial and municipal levels to determine the overall burden on every dollar of new business investment—or the marginal effective tax rate (METR).

The report finds gaps in the way governments measure the METR, most notably in the omission of business property and land transfer taxes, which the report finds represent roughly two-thirds of the total investment tax burden.

Adam Found, the report’s co-author, says, “Once governments better understand the effect of business property taxes on the cost of investment, they are more likely to reduce the burden these taxes impose.”

The report found Saskatoon offers businesses the most favourable tax environment among the Canadian cities examined, while Montreal presents the most significant burden. Following Montreal are Saint John and Charlottetown.

In contrast, Calgary offers the second-most competitive environment, though the report notes the city is starting to lag “as Alberta’s business tax environment deteriorates.” Vancouver was third, while Toronto and St. John’s were around the national average.

The report also graded provinces on the simplicity and clarity of their business property taxes. New Brunswick, B.C. and P.E.I. each scored an A, while Newfoundland and Labrador received a B grade. Alberta, Saskatchewan and Nova Scotia received the national average C score, while Ontario, Quebec and Manitoba lagged with D grades.